The Shift Behind the Euro's Uptick, and How to Trade It

The euro's having a good day for a change. Here's why, and how to trade the shift in mood.

The new year is starting off mighty nicely for the euro. But Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional, doesn't think it will last.

"We're just having a little bit of a quiet period right now, but I expect it's going to heat up soon and that any euro strength we get in the very short term is going to fade," she told CNBC's Scott Wapner. Patterson argues that "what's helping the euro today is nothing out of Europe." Instead, the move reflects a broad pickup in risk appetite that is weighing on the dollar after encouraging economic reports from the U.S.

The positive economic signals affecting the euro are also creating a different trading opportunity, Patterson says. Specifically, she recommends selling the U.S. dollar against the Mexican peso. "It's a leveraged play on the U.S. with a yield pickup," she says, pointing to short term Mexican interest rates at 4.5 percent.

Patterson entered the trade before the holidays at 13.89 and it has already moved in her favor, but she still thinks there is room for profit, entering at 13.6900 with a target of 13.0000 and a stop at 14.0000.

You can watch the discussion on this videotape (to the left), starting at 5:09.

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